craig 5,199 Posted February 7, 2018 Share Posted February 7, 2018 2 hours ago, Gonzo79 said: It puts the club on a surer financial footing and also puts to bed some of the daft rumours. How on earth does a credit facility put the club on a surer financial footing ? The facility provides short-term cashflow easing - that doesn't alter the need to ensure you "balance the books" ? 1 Quote Link to post Share on other sites More sharing options...
forlanssister 3,060 Posted February 7, 2018 Share Posted February 7, 2018 29 minutes ago, Gaffer said: A deal with Close Brothers suggests there is a bigger deal in the pipeline. This is not their normal business so I'm intrigued. If this was a simple facility we needed, why not just ask a high street lender? We have sufficient turnover and assets to secure significant borrowing, or even an overdraft facility. Close is only interested in this if there is something bigger in the near future, and there's only a win in this for us if that's the case too, otherwise Close is an expensive option. Perfectly normal deal from Close Brothers point of view. I'm inclined to view this deal in isolation, Close Brothers are an expensive option period. 0 Quote Link to post Share on other sites More sharing options...
craig 5,199 Posted February 7, 2018 Share Posted February 7, 2018 It will be reasonably cheap...... so long as we don't draw on the facility. Drawing on the facility dramatically increases the cost of credit facilities, and could signal short-term cashflow issues. I don't see this as being either positive or negative. Fairly neutral IMO - many businesses operate with credit facilities and they don't need to have cashflow issues in doing so (my company has over $4 billion of equity and hundreds of millions of $ in cash - but until last year we had a credit facility - it happens). This should provide a back-stop in the event of unforeseen expenditures when cashflow is minimal (as Robertson says, during the winter months) - but it should only be, as I said earlier, a short-term cashflow backstop and not to augment working capital as that would see us walking down a path we have been before. 2 Quote Link to post Share on other sites More sharing options...
Gonzo79 13,770 Posted February 8, 2018 Share Posted February 8, 2018 2 hours ago, craig said: How on earth does a credit facility put the club on a surer financial footing ? If a business is refused credit facilities it doesn't reflect well. 0 Quote Link to post Share on other sites More sharing options...
forlanssister 3,060 Posted February 8, 2018 Share Posted February 8, 2018 Just now, Gonzo79 said: If a business is refused credit facilities it doesn't reflect well. I think he may just know a thing or two about what he's talking about (in this instance anyway!).... 0 Quote Link to post Share on other sites More sharing options...
craig 5,199 Posted February 8, 2018 Share Posted February 8, 2018 35 minutes ago, forlanssister said: I think he may just know a thing or two about what he's talking about (in this instance anyway!).... Doesn’t happen very often 0 Quote Link to post Share on other sites More sharing options...
craig 5,199 Posted February 8, 2018 Share Posted February 8, 2018 37 minutes ago, Gonzo79 said: If a business is refused credit facilities it doesn't reflect well. And receiving credit facilities absolutely does NOT guarantee that said company is on a “surer financial footing”. Credit facilities provide very little assurance as to the credit worthiness of a company. It’s not dissimilar to saying “the bank approved us for a loan so we are on a surer financial footing” because that’s exactly what a credit facility is when you draw down on it (a loan). Would you honestly contend we would be on a surer financial footing if we had a bank loan ? I know I wouldn’t. 0 Quote Link to post Share on other sites More sharing options...
JFK-1 1,677 Posted February 8, 2018 Share Posted February 8, 2018 2 hours ago, craig said: It will be reasonably cheap...... so long as we don't draw on the facility. Drawing on the facility dramatically increases the cost of credit facilities, and could signal short-term cashflow issues. I don't see this as being either positive or negative. Fairly neutral IMO - many businesses operate with credit facilities and they don't need to have cashflow issues in doing so (my company has over $4 billion of equity and hundreds of millions of $ in cash - but until last year we had a credit facility - it happens). This should provide a back-stop in the event of unforeseen expenditures when cashflow is minimal (as Robertson says, during the winter months) - but it should only be, as I said earlier, a short-term cashflow backstop and not to augment working capital as that would see us walking down a path we have been before. I took away from it that he was intending to convey something along the lines of say for example a diamond like Morelos had been unearthed and would be available during the January window when as he says cash flow is minimal. They may then borrow the money and pay it back when the season ticket money comes in. I'm no financial wiz but such a scenario as I presented is what I was taking from it. 0 Quote Link to post Share on other sites More sharing options...
craig 5,199 Posted February 8, 2018 Share Posted February 8, 2018 7 minutes ago, JFK-1 said: I took away from it that he was intending to convey something along the lines of say for example a diamond like Morelos had been unearthed and would be available during the January window when as he says cash flow is minimal. They may then borrow the money and pay it back when the season ticket money comes in. I'm no financial wiz but such a scenario as I presented is what I was taking from it. The whole point of credit facilities is, normally, to provide short-term cash flow in the event of unforeseen circumstances. A short-term assistance. it could be as simplistic as being used for payroll payments (though you would hope the financial planning of the club would be better than to use a credit facility for that when cash flow is minimal) - but it would normally be for things that are unexpected. those unexpected things could be a transfer as you say (though that can also lead down a path....) or unexpected emergency repairs to Ibrox or Auchenhowie etc. 0 Quote Link to post Share on other sites More sharing options...
JFK-1 1,677 Posted February 8, 2018 Share Posted February 8, 2018 14 minutes ago, craig said: The whole point of credit facilities is, normally, to provide short-term cash flow in the event of unforeseen circumstances. A short-term assistance. it could be as simplistic as being used for payroll payments (though you would hope the financial planning of the club would be better than to use a credit facility for that when cash flow is minimal) - but it would normally be for things that are unexpected. those unexpected things could be a transfer as you say (though that can also lead down a path....) or unexpected emergency repairs to Ibrox or Auchenhowie etc. I wouldn't see such a transfer as I was envisaging as necessarily leading down a path. I want them to have the option of credit but I don't want them accumulating debts. As I said if something that appeared to be a good deal emerged in a January window I would want them to borrow to get it. But only within the limits of paying it back as soon as the season ticket money comes in thereby avoiding long term interest payments then continuing to conduct business within our means. But I would agree it certainly doesn't put us in a sounder financial position. All it means is we have the option in exceptional circumstances. Only greatly increased revenue will put us on a sounder financial position and as it stands only Europe is a viable option at this time to do so. 0 Quote Link to post Share on other sites More sharing options...
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